[jcranmer]

That you have to pay taxes to the US gov't in USD, and you have to treat all transactions as if they were denominated in USD, gives it intrinsic value. But if the US gov't were to print USD indefinitely and destroy people's expectations of its value, its value would correspondingly collapse--aka hyperinflation.

If you want a challenge, try explaining why the Somali dollar still held its value despite being a fiat currency that lacked a government to back up its value for well over a decade.